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A Manhattan prosecutor yesterday urged a jury to convict three former executives of Dewey & LeBoeuf for allegedly cooking their law firm's books to defraud lenders and investors, arguing they ordered the fraud even if they did not personally carry it out, Reuters reported yesterday. "They were all intentionally aiding the criminal conduct in this case," Assistant District Attorney Peirce Moser said of former Dewey chairman Stephen Davis, former executive director Stephen DiCarmine and former chief financial officer Joel Sanders. The three men are accused of manipulating the firm's accounts in a failed attempt to avoid its 2012 bankruptcy, which was the largest ever for a U.S. law firm. They each face dozens of counts including grand larceny, conspiracy and falsifying records. The most serious counts, for grand larceny, carry up to 25 years in prison.

A lawyer for Stephen DiCarmine, the former executive director of the once-prominent law firm Dewey & LeBoeuf, told a New York jury yesterday not to convict his client based solely on dozens of emails, the New York Times DealBook blog reported yesterday. Prosecutors have said that the emails introduced during the three-month trial indicated that DiCarmine had an awareness of accounting shenanigans at the law firm, which collapsed in May 2012. But Austin Campriello, the lawyer for DiCarmine, said that the emails could be misinterpreted and “can be easily misconstrued.” Campriello told the jurors that the emails were untrustworthy without witness testimony to support the incriminating inference that prosecutors wished to draw. In his closing statement on Wednesday, Campriello noted that none of the seven former Dewey employees who pleaded guilty to lesser criminal charges and testified at the three-month trial had directly linked DiCarmine to any improper accounting maneuvers.

The collapse of Dewey & LeBoeuf, once one of the biggest U.S. law firms, was due not to fraud by top executives but defections by its highest-earning partners, defense lawyers told jurors yesterday at the close of a criminal trial in New York, Reuters reported. Former Chairman Steven Davis, who helped build Dewey into a 1,000-lawyer firm before it went bankrupt in 2012 under a crushing debt burden, had no reason to believe the firm's books was false in any way, lawyer Elkan Abramowitz said in state court. Along with former executive director Stephen DiCarmine and former chief financial officer Joel Sanders, Davis faces dozens of counts including grand larceny, fraud and falsifying records. The most serious charge carries up to 25 years in prison. Over nearly four months of testimony, the office of Manhattan District Attorney Cyrus Vance has argued the three men directed subordinates to conceal the firm's teetering finances from lenders like Bank of America Corp and Citigroup Inc. through false accounting adjustments from 2008 to 2012. Dewey's bankruptcy was the largest in history for a U.S. law firm.

As motorists head out on the last big driving weekend of the summer, the credit card industry and gas-station owners are deploying everything from sophisticated software to heavy-duty padlocks to combat an epidemic of fuel-related theft and fraud, the Wall Street Journal reported today. The crackdown is gaining additional momentum because many gas stations will be among the last merchants to install equipment accepting a new generation of fraud-resistant cards. While many big merchants will have equipment in place by Oct. 1 to accept the new chip-based cards, tougher guidelines set by Visa Inc. and MasterCard Inc. don’t apply to gas stations until 2017. That delay could exacerbate what analysts, card companies and law-enforcement officials say has been a recent surge in fraud at the pump. The crime wave has been driven by the flood of stolen credit-card data easily accessible online, much of which was swiped in high-profile breaches. Last year alone, popular retailers Home Depot Inc., Staples Inc. and Supervalu Inc. were hit by hackers. Stolen numbers are available for as little as 50 cents apiece, experts say.

Defense lawyers for three former Dewey & LeBoeuf LLP leaders accused of committing financial fraud failed get the case tossed out Tuesday, as a judge ruled there was enough evidence to send the matter to a jury for deliberation, the Wall Street Journal reported. New York state court Judge Robert Stolz did reserve the right to dismiss some of the 100 counts against the trio — Dewey’s former chairman, Steven Davis, ex-chief financial officer, Joel Sanders, and former executive director, Stephen DiCarmine — before sending it to the jury. Assistant District Attorney Steve Pilnyak argued in court on Tuesday that prosecutors have laid out enough evidence over 3 months, through 41 witnesses, to prove the ex-Dewey leaders oversaw a scheme to manipulate the fallen law firm’s books in the years leading up to its 2012 bankruptcy.

A federal judge ruled on Tuesday that the former chief operating officer and chief credit officer of a California-based bank that went bust must spend more than eight years in prison, the Wall Street Journal Bankruptcy Beat blog reported yesterday. Ebrahim Shabudin had been convicted of seven federal fraud charges following the 2009 collapse of United Commercial Bank. Prosecutors accused Shabudin of orchestrating an elaborate scheme to hide the bank’s troubled finances, including securing more than $300 million in federal bailout funds that were lost when the bank failed in 2009. Its assets were sold to another bank, and its parent filed for bankruptcy liquidation. Specifically, Shabudin was accused of falsifying bank records to hide millions of dollars in losses and shore up the bank’s reputation during the height of the financial crisis. After a six-week trial, a jury in March found him guilty of securities fraud and six other charges.

An auto loan company that allegedly offered illegal loans to Oregon residents is being sued by Oregon Attorney General Ellen Rosenblum’s office, CollectionsCreditRisk.com reported today. The lawsuit claims that the company — which used several aliases, including Auto loans LLC, Car Loans LLC and Sovereign Lending Solutions — is repossessing cars when consumers fail to pay back loans. Rosenblum’s office claims the company sold loans to at least 250 Oregonians in exchange for getting listed as a security interest holder on their car titles. According to the lawsuit, the company isn’t licensed to offer loans in Oregon and charges annual interest rates of 181 percent to 334 percent.

A lawsuit seeking to reclaim $825 million from two major funds that invested with Bernard Madoff may move forward largely intact, a bankruptcy judge ruled on Tuesday, Dow Jones Daily Bankruptcy Review reported today. Bankruptcy Judge Stuart M. Bernstein largely rejected a bid by the funds, Kingate Global Fund Ltd. and Kingate Euro Fund Ltd., to dismiss litigation brought by the Irving Picard, the trustee winding down Madoff's investment firm. The lawsuit seeks to recover the $825 million that the two funds, so-called feeder funds that pooled investors' cash and sent the funds on to Madoff, received in the six years before the 2008 collapse of what was ultimately to be revealed as the largest Ponzi scheme of all time. Read more. (Subscription required.)

Learn more about the challenges faced by investigators in a commercial fraud case and the tools they use to unwind fraudulent transactions. Pick up a copy of ABI’s newest title, Fraud and Forensics: Piercing Through the Deception in a Commercial Fraud Case!

Also, fraud issues and a discussion of the book are the topic of ABI’s latest podcast with author Kathy Bazoian Phelps. Listen here!

Federal authorities announced today that they had broken up a five-year scheme in which rogue traders gave overseas hackers a “shopping list” of confidential corporate news releases to steal, generating more than $30 million in illegal profits, the New York Times reported today. The authorities are preparing to announce the filing of criminal charges against nine people who used confidential information about corporate deals that was stolen by hackers to make trades. The unusual case, which links hacking with insider trading, is being brought by federal authorities in New Jersey and in Brooklyn. The Securities and Exchange Commission is bringing a parallel lawsuit. The investigation has been in the works for a while and federal agents began making arrests today. Federal prosecutors in New Jersey today unsealed an indictment against five men that laid out the basics of the case. It said that the men had been hacking into companies like Business Wire and PR Newswire over five years to steal more than 150,000 news releases put out by publicly traded corporations before the information had been released to the public. The men, some of them hackers in Eastern European countries and others located in the United States who traded on the information, made at least tens of millions of dollars trading with the information. Another company that had its releases stolen was MarketWire, according to the indictment.